Farewell BBA: Lobby group backs plan to merge bank industry bodies after Libor scandal

The public face of the City of London is being reshaped by the merger
The public face of the City of London is being reshaped by the merger Credit: Simon Belcher/imageBROKER/REX/Shutterstock

Britain’s banks and building societies have backed a plan to merge four industry trade associations, in a move that is expected to save millions of pounds per year and enhance their lobbying power.

The British Bankers’ Association is the latest to vote to join the scheme, which will see the body merge with the Council of Mortgage Lenders, Payments UK and the UK Cards Association.

The BBA was a major power in the industry and was a prominent lobbying voice in the financial crisis, but its image was tarnished by the Libor rigging scandal.

The BBA was responsible for the administration of Libor, the crucial interest rate benchmark that measures how much interest banks charge on loans to each other, and on which trillions of pounds-worth of loans and derivatives are priced around the world.

The BBA's then-boss Angela Knight became a famous face in the financial crisis, standing up for the banking industry
The BBA's then-boss Angela Knight became a famous face in the financial crisis, standing up for the banking industry Credit:  Julian Andrews

The organisation no longer administers Libor, reducing its income from the benchmark and so driving up membership fees, as well as harming its image.

Almost all members backed the move – 94pc of finance groups in the BBA supported the merger.

The other three organisations have already voted in favour of the merger.

A detailed study last year by the Financial Services Trade Associations Review found that the merger would boost the combined voice of the banks in public, political and regulator circles, focusing campaigns and lobbying more effectively.

It will also save money. The review suggested the new group takes out a loan of £15.5m to fund the restructuring, and estimated that the money would be repaid by efficiency savings in three and a half years – indicating the multi-million pound per year benefit of the merger.

Libor was administered by the BBA, but turned out to be open to manipulation - former trader Tom Hayes is serving time in prison over Libor-related conspiracy to defraud
Libor was administered by the BBA, but turned out to be open to manipulation - former trader Tom Hayes is serving time in prison over Libor-related conspiracy to defraud Credit: Warren Allott

Costs should fall as fewer staff will be required across the group – for example the combined organisation will only need one chairman and one chief executive, rather than the four currently in place – as well as less office space and other services.

Following the repayment of the loan, under this plan, fees to banks will also fall.

The new group has not yet got a name or a chief executive. The process will now be run by an interim board.

Despite the effort to tidy up the sprawling membership groups sector, several other groups still remain.

One is TheCityUK, an entity that promotes the UK’s financial services sector at home and in Europe, and which has a prominent voice – its current chairman is John McFarlane, the influential chairman of Barclays.

Another is the Building Societies Association, which shares some members with the groups involved in the merger. However the BSA also has a different agenda, promoting the mutual sector rather than the shareholder-owned model of finance represented by the banks.

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